The US President claimed the US Dollar is strong and expressed no worries about its decline. He mentioned past tensions with China and Japan regarding currency devaluation. The US Dollar Index (DXY) dropped about 1.20% to 95.85. This is its lowest performance since April 2025 and the weakest point since February 2022. On that day, the dollar weakened against all major currencies, especially against the Swiss Franc, which fell by 1.81%.

Market Shift

The table below shows how the US Dollar changed against key currencies. The Dollar fell by 1.18% against the Euro, 1.06% against the British Pound, and 0.93% against the Japanese Yen. Other major currencies also changed against one another. The Swiss Franc was the strongest, gaining against the US Dollar and other currencies. Changes among the Euro, Pound, and Yen were small, indicating they are relatively stable. The market quickly rejected the President’s comments about a “great” dollar. This signals a problem. The US Dollar Index saw its biggest daily drop since last April, hitting its lowest level since February 2022. The gap between what the White House says and market reality points to a strong downward trend. Fundamental data supports this trend, which has weakened for months. The latest report showed US GDP growth for Q4 2025 was only 0.7%, and inflation cooled to 2.4%, well within the Federal Reserve’s target. Market expectations now show an 85% chance of a rate cut at the Fed’s March meeting, based on Fed funds futures.

Trading Strategies

For traders, this suggests preparing for continued dollar weakness and increased volatility. We could consider buying put options on the US Dollar Index (DXY) or on specific pairs like USD/JPY, with expiration dates later in February or March. The recent price movements also make long volatility strategies, like buying straddles on major pairs, appealing to take advantage of large price swings. Historically, when the dollar dropped from levels seen in early 2022, it led to a lengthy decline into 2023. The current price movements are similar, suggesting the long dollar bull run may be over. We need to rethink any long-term strategies that relied on dollar strength over the past few years. The Swiss Franc’s remarkable 1.81% gain against the dollar shows a strong demand for safe assets. This makes shorting the USD/CHF pair an attractive option in the coming weeks. We can do this by buying puts on USD/CHF or selling futures contracts to benefit from this strong safe-haven trend. Create your live VT Markets account and start trading now.

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